Posted
by
Unknown Lamer
on Wednesday July 06, 2011 @10:21AM
from the one-i-ring-to-rule-them-all dept.

An anonymous reader writes "Phillip Elmer-Dewitt draws on several sources to argue that 'Apple has become not a monopoly (a single seller), but a monopsony — the one buyer that can control an entire market.' According to Dewitt, Apple uses its $70 billion cash hoard to 'pay for the construction cost (or a significant fraction of it) of [tech factories] in exchange for exclusive rights to the output production of the factory for a set period of time...' This gives Apple 'access to new component technology months or years before its rivals and allows it to release groundbreaking products that are actually impossible to duplicate.'"

Based on the article summary, if Apple is fronting the cash to BUILD factories in exchange for exclusive rights on the items the factory produces, I think it's fair to say that a lot of groundbreaking is going on.

Based on the article summary, if Apple is fronting the cash to BUILD factories in exchange for exclusive rights on the items the factory produces, I think it's fair to say that a lot of groundbreaking is going on.

I guess an Apple-branded jackhammer or steamshovel would be pretty groundbreaking then, woudln't it?

That is standard vertical integration, which is as old as the industrial revolution. The only difference is that they don't *own* the factories, they just invest in them and extract the usefulness out of them, and then leave someone else to clean it up when it is no longer useful.

Anything Apple touches is groundbreaking. How dare you sully their reputation in the year 56 ASJ*. There was nothing groundbreaking prior to the year 1 ASJ. In fact we hardly know anything that happened in those dark times.

* ASJ = After Steve Jobs. BSJ = Before Steve Jobs, when the dark ages were upon us.

Oh please. What is with you hippies trying to call a thing what it isn't? Look, we all know the Steve was the son of a carpenter, and in fact Jobs was the Steve. Now, what's up for debate is whether or not Jobs actually had reality-warping powers enough to have risen from death not once, but twice; and, indeed, even if the concept of the Steve as given is a load of dingos' kidneys in the first place. But we all know that your "Apple Era" just means "yeah, we don't want to say that the world revolves aro

Thank you. I have yet to see any Apple product that is groundbreaking. Pretty, yes. Groundbreaking... no. Everything they have come out with had already been made by someone else, Apple just put a pretty face on it. Or bundled already available concepts together a little differently.

I would classify Apple more as innovative. For instance, they control their Apple computer market through egregious licenses. Today's Apple is no more than a PC, yet where are the clones?? Apple simply created a license

The vast majority of the population are stupid as rocks, apple is making things accessible for them.

Wow, way to be a condescending prick. The whole point of computing devices is to make tasks simpler.

I wonder how you would feel if, in order to feed yourself, you had to hunt or grow your own food. Do you know how to do that? I sure don't. I wouldn't care to be catagorized as a "dimwit" by a hunter, because I don't know how to kill my own deer for dinner. But I'm sure glad that the agriculture industry has come around, and made it simpler to put food in my stomach.

As a software engineer, I'm glad to make shit easier for people to do. Your attitude can go crawl under a PDP-11.

Just because someone isn't tech savvy doesn't make them stupid. Tech is what we are good at, other people are good at different things. I am sure there are many simple things you and I would fail at, that other find easy. Just because we can configure wifi settings doesn't make us superior.

the general public is so stupid that if it does not automagically connect or produce a pop up of "hey wifi here! want to connect to it?" they will never figure it out.

You're confusing ignorance with stupidity.

Joe Sixpack may not know much about wifi connectivity, but I'm willing to wager that you can't do cartesian math in your head, do double-entry bookkeeping, weld aluminum, or know how to convert a Ford 420 engine into a 460 (I'll save you the time: it's the timing chain). Conversely, I don't expect an auto mechanic, welder, or accountant to automatically grok wifi on a small device that can have a crap non-intuitive UI (especially back in the early days of it).

You're right, you're far better than Apple users since you think spending your time digging through random settings to connect to a network is a better way to do things then having the device prompt you when it needs connectivity and finds a bunch of potentials to use.

Are you fucking retarded? You're calling someone stupid because they don't remember how to dig through some bunch of menu options on their phone? You and I... well not me, I'm not a retard, just you... may have so little to do in life that

Yeah, I think they overused the breathless adjectives there--far more than to my taste. This isn't news. Apple doesn't control the parts market by any means--they just don't ship that many units.

However, they could have said something like "Apple vertically integrates its part suppliers while trying to predict hardware trends by going all-in on the manufacturing side. This means when they guess right, they have an advantage over the rest of the market because they have already reserved capacity. When th

This is like saying Ford controls the car components market because they have factories exclusively supplying them with parts. Just because you own a factory the produces certain things, doesn't mean that somebody else can't create their own factory creating the exact same things. It would actually make sense for Apple to have control of a few factories to ensure supply, rather than relying on factories that also supplied other companies, meaning they could have shortages if some other company had an incr

Just because the design of an Apple product is distinctive doesn't mean that the product is automatically groundbreaking.

If they're based on components that nobody else has access to and won't for some time because only Apple is in the supply chain.

If nobody else had access to capacitive touchscreen, like they say in the article, nobody could come up with a product that does the exact same thing.

The article reads like it can actually give Apple several years of lead time to bring products to market using new, and ground breaking, technologies that rivals can't access because Apple paid for the initial manufacturing capacity.

Design here doesn't mean the external things that users see, but the actual design and manufacturing of the device...

One extraordinary example of this is the aluminum machining technology used to make Apple's laptops - this remains a trade secret that Apple continues to have exclusive access to and allows them to make laptops with (for now) unsurpassed strength and lightness.

doesn't mean that Apple is making the prettiest laptop cases, it means that nobody else can make a laptop case using the same techniques as Apple does. Which implies there's more behind the scenes than people realize.

As I read this, Apple is innovating new techniques, and paying to have them brought to market exclusively by them by actually building the manufacturing capacity for the technology in the first place.

If that's not groundbreaking and innovation... I'm not sure what qualifies.

Well, patent portfolios have allowed Microsoft to force a bunch of Android handset manufacturers to pay licensing fees on every handset.

The screeching herd of lawyers and legal precedent might make you reconsider that... as long as the courts uphold that patents as they stand carry legal weight, you'd be a fool to think you could write commercial software and not be aware of patents.

The example the author gives is not an example of a monopsony. Yes, Apple is a 600 pound gorilla, but they are nowhere near a monopsony when it comes to manufacturing components. Just because Foxcom builds factory A for Apple does not mean they [or anybody else for that matter] can’t build another factory.

Labor Unions are [or were] the classic example of a monopsony. If you wanted to buy labor you had to hire Union workers – they were the only supplier.

The article talks about innovation in components and manufacturing processes, not commodity devices. When Foxconn builds factory A and Apple has negotiated an exclusive contract for a component which is so expensive to manufacture that the competition cannot or will not produce it equally or cost-effectively, then that makes Apple the single buyer of that component.

Apple has taken the initiative may times to buy out the full output capacity of these factories, and at times, actually paying for the construc

The part I don't get is why, if they paid for the factory to be built, is it such a problem that the factory only builds things for them? And what's stopping other billion-dollar companies from building their own factories?

Exactly. So far the only thing that puts Apple ahead is their willingness to gamble on technologies by using that huge cash stockpile and that they are usually first to do so. Nothing prevents their competitors from doing the exact same thing. From what I read one of the reasons that so few of the early Android tablets were 10" was that Apple pretty much bought out the supply of 10" screens a year before anyone else. Of course, Apple could have been wrong and consumers may have wanted smaller screens bu

how much other manufacturers are really being stopped from using said components. My inclination from past experience is that most non-Apple companies would choose to use lesser quality components to keep prices down. LCD displays for example, have for the most part been a lot worse on laptops, music players, etc.

All those other companies have to do is build their own private-output factories and hope their factory comes up with the components before the Apple factory.

Somehow I think Apple would probably still sue and say "Our factories came up with it first!" while their factories secretly steal/produce whatever they are contesting. They have become the evil giant. They are no longer innovative, but are now just blanket-grabbing anything in the tech field to try to profit from patent whoring.

Lots of people are crying anti-trust but the question I have is who did the R&D for the components in question? Did Apple do the development and contract with the fabricator or did the component company have something cool and Apple said "Okay, we'll back you in exchange for the first production runs."? If Apple did the development work, I see no grounds for anti-trust. Even if it's the latter, so what? It's not like other companies can't do the same thing with other fabricators.

And Apple allows the fabricator to sell to anyone after the exclusive period (six months, a year?) is over. So Apple is benefiting but also doing the whole industry a favor. Just because Apple wins doesn't mean everyone else loses. Android isn't losing much, is it?

Generally a combination of the component companies with perhaps the odd contribution from academia rather than Apple, I think, though pretty much anything related to Apple is so shrouded in secrecy and NDAs it's impossible to be sure. Apple have been doing more or less this for a while - the reason the first iPod was so compact for its capacity was because they spotted Hitachi were producing a very small hard disk they could use and bought up the entire production run. The only real news here is that they'v

or did the component company have something cool and Apple said "Okay, we'll back you in exchange for the first production runs."?

And that is 100% legal to do, there is nothing monopolistic about it. Doing that very thing is in fact one of the reasons the patent system was established.

Apple didn't say 'give us exclusive access or will run you into the ground' they said 'want us to bankroll your massive new factory? We get exclusive access to those component designs for 5 years in exchange for the loan then'.

Those are two entirely different things, one is evil, one is doing business. One prevents expansion and innovation, one actua

This is well known, the reason the iPod got so big is because Apple dared to buy in such huge amounts they not only got the output of entire factories, they managed to drive the unit price they payed down so that nobody else could compete. This is why you there is no such thing as a 64GB mp3 player from Cowon and why Archos tends to go to HD, they just can't buy flash at the price that allows them to compete with apple and its 64gb offerings.

BUT Apple ain't got it all their way, they misjudged Amoled and for now it seems they can't just buy their way in. Samsung needs all the displays it can produce for itself. Small players like Cowon can get their displays but if Apple wants to use them, it better make some friends. Why should Samsung help Apple with the iPad3? They got their own tablets to sell.

Is amoled that hot? Well, I compared a nexus S with a iPhone and the nexus can easily be read in broad daylight, the iPhone not so much. As for all angle viewing, I can't always hold the screen steady or at an optimal angle. Enegery usage is claimed to be lower as well (can't verify this myself), they are thinner and lighter and resolutions might be higher for a lower cost.

So, Apple gets flash nobody else can afford at the same price but they don't get it all. It has always been the tradeoff for a company relying on parts from others. You can buy what you want, but will always be depended on others for what you can buy. The cutting edge will always be held ultimately by those who develop in house but at the huge risk that you bet on the wrong horse and end up with something nobody wants. Remember minitiature HD's? Not the ones that were in the first iPod's, even smaller ones, destined for the smartphones of the future... I seen them in some MP3 players but the risk those companies took didn't pay off, the world turned to flash instead.

And for all its market power, where is the real innovation with the iPod? What did it, does it do, nobody else did before them AND does it better?

In many ways the iPod is the wallmart player, it shows the power of bulk purchasing and putting it in a saleable package but little else.

Whatever GP said completely flew over your head, didn't it? He was basically explaining why Apple iPads are as good as they are today. It's not because the engineers there are geniuses, but because their operations division is has made extremely bold and risky decisions that paid off.

Apple products aren't magically intuitive. For example, i can't seem to grok my girlfriends ipod. I don't think the wheel is a good way to navigate a linear list, at least not in the way they've presented it. Apple obviously doesn't either, since they haven't emulated this same interface into the iphone/ipad.

So just because you've learned to use apple products doesn't make then intuitive, it just means that you've learned their paradigms, and therefore perceive them as more intuitive.

STOP WITH THE ONE BUTTON MOUSE ARGUMENT ALREADY!!! The last 1 button mouse was produced in 2000 or 2001...you know, TEN YEARS ago. And even then, multi-button mice where supported al the way back to OS 7.6(?)

The problem with the flash argument is that you just need more chips. If you can only buy 32 gig chips, then use 2. And if 32 gig chips are made in vastly larger quantities than the 64 gig chips that only one OEM uses, then the prices for 2 32 gig chips approach 1 64 gig chip.

Another problem is that 64 gig in a portable device is unnecessary. Sure, you can carry around a lifetimes worth of music, but you'll never listen to it all before the end-of-life of the device. That's why most other OEMs add a micro S

Because Apple will sue the crap out of you if you create anything that looks remotely like their product. (Ex:http://www.usatoday.com/tech/news/2011-04-18-apple-samsung-suit.htm). They tried to sue Samsung because they too created a touchscreen tablet. They try to patent every and anything. I mean Jobs has a patent on the staircase of the Apple Store in Union Square, the iPod Nano box(yes, the box it comes in), and their power adapters.

This gives Apple 'access to new component technology months or years before its rivals and allows it to release groundbreaking products that are actually impossible to duplicate

B.S. Due to economies of scale, Apples competitors could always produce the components for cheaper than Apple, assuming they know what they're doing, which apparently they do not.

Given equal quality of management, etc, Apple will always get a lower rate of return on their cash that their competitors or a 3rd party would get.

The only reason for Apple to finance their own stuff, is because they have an extremely specific set of requirement for their individual device... Nothing stops Nokia or whoever from doing the same thing.

B.S. Apple produces most of its shiny plastic crap in China, where intellectual property means absolutely zero. Their designs will be leaked and copied by other manufacturers they don't control before Apple even knows they've come up with it.

Not when Apple patents EVERYTHING. They've even just patented the touchscreen [pcworld.com]. The fact they were able to pull that off shows just how broken the U.S. patent system really is, but Apple is happy to ride that broken system into more cash.

The competitors can only get better economies of scale if they were all using the same components from the same manufacturers, and even then, only if they use group purchasing: individually, they don't have the sales to justify the quantities required to get cheap manufacturing, and even if the manufacturer can afford to sell cheaper, it won't sell much below its other competitors unless the tech manufacturers can negotiate a collective deal. Even if they did all standardize on the components they were usi

Seriously, just produce a great product. Take a risk, kill your cash cow which is holding you back, and go ahead and make something great, something that's better than what's available now, makes tradeoffs in the right places, is super easy to use and it'll sell.

Its just another: "We build the factory, you operate it" agreement. Things like this exist in Mining, Oil refining, basically all kinds of manufacturing processes where some big company decides they need more resources of a certain type and sees the possibility to use some of their cash to invest in something where they know it will make revenue.

I hope for Apple that they don't exaggerate it to the level that the ties created by this investment will hinder their design. If some competitor produces something better, switching has an added cost.

"Things like this exist in Mining, Oil refining, basically all kinds of corrupt politically-influenced manufacturing processes, where some big company decides they need more resources and pay off the man in charge to give it to them with taxpayer money or under the table."

Case in point
Shortly after its release, iPod became synonymous with mp3 player. Sure, there were other mp3 players out there. However, Joe and Jane Public knew them as iPods or even worse "iPod knockoff." If im not mistake, Blackberry introduced the consumer market to the smartphone with the Curve. However, the market exploded with the release of the iPhone. In today's tablet market the iPad is king. I hate Apple products, because of their dependency on iTunes(ya, there are shitty alternatives) but im simply stating the facts.

Why are these products a staple within their respect markets? Its because they are advertised as such. People might like the fact that they are shiny. The fact that the UI remains consistent across product lines is nice too. The fact remains, if iProduct wasnt marketed so well it would be just another plain box on the retail shelf.

Agreed!
Marketing is extreme, but I wouldn't call it groundbreaking either. They just do what every large brand does.

The main point is however, that linear extrapolating development, making stuff smaller, faster and embedding it more and more is just how development has been done the last 30 years. It is not groundbreaking.

The vaccuum tube was groundbreaking.
The transistor was groundbreaking.
The silicone chip was groundbreaking.
The ipod/ipad/iphone was a knockoff on the iPaq or to be nice, a linear

Apple designs appliances for the consumer masses--with well executed industrial design and software to go along with excellent hardware; instead of designing gadgets which non-technical people have trouble using.

The unwavering focus on the typical user experience is truley groundbreaking and that's why they are printing money.

There is literally no evidence one could present to you that would convince you that people buy Apple products because they are good products and not because they say Apple on them. Essentially you are making claims which are not falsifiable--which is pretty much the definition of a religon. Have fun with your religon.

Why are these products a staple within their respect markets? Its because they are advertised as such. People might like the fact that they are shiny. The fact that the UI remains consistent across product lines is nice too. The fact remains, if iProduct wasnt marketed so well it would be just another plain box on the retail shelf.

That's simply not true. There's very little iPhone/iPad advertising here in Belgium, certainly much less than from their competitors, and yet they sell like hotcakes. This was even true with the original iPhone which wasn't advertised at all here because it wasn't sold here officially, yet people were importing (and jailbreaking/unlocking) them in droves creating a whole internet grey market. You could show your iPhone in person to people who had no clue who Apple even are and they all immediately wanted on

This is a great example of how a natural monopoly works. Patents were intended to give their owner a monopoly for a limited time to make back the R&D cost. This shows what I have always said. There are natural monopolies that exist when you do new things. First there is a time to see if the product will be successful in the market place and then more time to ramp up production to copy it. The beauty of a natural monopoly is that the time of the monopoly is proportional to the advancement of the idea. If it is something simple it gets copied quickly and easily. If it is radical it make take years. This is far better than our patent system which awards the same term to all patent classifications.

Much as I think the current patent system is screwed, if we didn't have anything, all that would happen is the little guy would get walked over. Not many inventors creating products in their shed could afford to bankroll factories to produce the goods ahead of the competitors, and the second they showed it to a big company with a view to investment without some kind of protection, they'd have their idea stolen. In my view each additional patent you secure should increase the cost to secure more exponentially. That would allow the little guy to secure a handful of patents while effectively preventing global corporations from patenting hundreds or thousands of ideas (they'd have to cherry pick what was worth protecting and what could go to the open market).

It's nothing that their competitors couldn't do. Investing in production to get a discount and/or exclusive supply is simply good business. The notable differences are that Apple seems to be doing it pretty often and that every time Apple tries it it's a home run (aluminum machining process = macbook air, capacitive touchscreen = iphone/ipad, etc.). But just because a competitor can't duplicate a product or component on their own and can't purchase from Apple's supplier doesn't make it anti-competitive. Also, it's not like they're doing this to cripple supply for other competitors. They're not buying all that DRAM in order to sit on it and starve the market. They're shoveling it into products and selling them. ( a notable exception might be LiquidMetal but we haven't seen any products using it yet except for the SIM eject tool in iPhones. LiquidMetal is protected by patents so competition couldn't make it if they could).
These products do get commoditized eventually. Does that happen faster or slower due to Apple's intervention? If it's slower then maybe competition isn't as serious as it should be. If it's faster then what's the problem?
Hate on Apple all you want, but if Dell, HP, or Acer wanted to invest in custom gear for a factory in order to get exclusive output, there's nothing preventing them. I'd be surprised if they haven't already, and it's just flying under the radar. The only reason this is news is because it's Apple.

Remember back when companies actually owned their own factories, made their own parts, and assembled them? Computer companies too, had all sorts of factories making tons of their own components. That set up exactly the same situation but worse, because to make an equivalent part you would have to build it elsewhere, as no one was going to sell to their competitor.

This outsourcing of all production is a new thing which was brought on by globalization and the availability of cheap labor in places like China and South Korea. So Apple invests in building a factory, and gets a big amount of its output, but in the end it is not Apple's factory, and they can make contracts with others once their deal with Apple expires.

Not that I like Apple doing this, but they have really figured out how to get the best of both worlds. They get the cheap prices of globalization, and the competitive edge of controlling their own production.

Remember back when companies actually owned their own factories, made their own parts, and assembled them?

This outsourcing of all production is a new thing which was brought on by globalization and the availability of cheap labor in places like China and South Korea.

I remember when some did. Contrary to popular belief, it's never been universal.

Nor is outsourcing as new as you think. Across the 20th century and right down to today production in the US was 'outsourced' to places like the West and the South because land and labor there was cheaper than in the East (especially the Northeast). (That's one of the reasons there are so many abandoned textile and lumber mills from the late 19th and early 20th centuries scattered across the Northeast.) Another key that most people miss is cheap bulk transportation - railroads through the 20th century to now, and container ships from the late 20th century. (Arguably, without containers, the whole 'globalization' things falls apart due to the high labor costs of handling individual boxes multiple times as they switch transportation modes.)

Not that I like Apple doing this, but they have really figured out how to get the best of both worlds. They get the cheap prices of globalization, and the competitive edge of controlling their own production.

Sears & Roebuck was doing the same thing with production 'outsourced' to the (American) Midwest and the South as early as the 1920's.

They have to walk a very fine line where they claim that Apple doesn't actually produce products with any intrinsic value, but instead they trick billions of people into thinking that they do with "marketing". Oh and Apple is evil for locking down their devices eventhough the overwhelming majority of their customers are perfectly happy to have them locked down.

I've seen FAR more tribalism among Apple fanatics than I've ever seen among critics. I've met Apple fanatics who literally will not talk to someone who they see using a PC. I've never met an Apple critic (or any PC user) who was that anywhere near that obsessive in their dislike of Apple or their love of their PC.

And if anyone thinks I'm exaggerating about Apple fanatics (and I mean the real hardcore guys), check out the documentary MacHeads [imdb.com]. It is at times cute and humorous, and at other times downright di

Yeah, the "proof" is in the, uh, commodity hardware they spraypaint white and hawk to hipsters? They've got computers that are allegedly well-built versions of every other computer out there, and phones and iPods and tablets that are simply LCD panels with memory and some kind of ARM processor.

You're arguing that it's normative, preferable to the other available outcomes (the duck's ass outcome in particular), and that Wintel succeded becasue of a position that manifests a moral value, openness. The word did not excape your lips but your argument is a functional value judgement.

Anyway, it was not a wintel hegemony that clobbered apple in the 80's

This is where I'm supposed to sit and let you pretend that people actually were successful selling x86 ISA computers that didn't run MS-DOS and Windows -- the hardware platform was open (GOOD) but none of that openness fi

Yes, h4rr4r we know you hate Apple. Is your life so devoid of meaning that you have to remind us countless times a day about this? Seriously, you need to go see a psychiatrist to work out this unhealthy obsession you have with Apple and Steve Jobs.

Yeah, I hate them, you hate them, but you really have to think about everybody else in the world. They (the computer industry) have been trying to sell industrial and commercial level computers to home consumers since the advent of the computer. Apple is the first company to focus exclusively on the home user. This makes their products very attractive for a lot of people. While you may not like, and have no use for their products, there are many who like Apple products simple because they are designed f

This is a little similar to what Standard Oil could do: get much lower shipping rates on oil because of how much volume they produce. The difference being that Standard Oil had nearly 95% of the oil market whereas Apple isn't anywhere close to that.

Standard Oil also owned railroads, and would shift box cars in front of pipelines and disallow running pipelines under the railroad. This meant that other oil companies had to put the oil in barrels and carry it across the tracks... which of course is why they put box cars there.

What technology has apple gotten ahead of everyone else? They've combined some things, sure, but I don't know of anything single component that was exclusively theirs (their own ARM cores don't really count as they don't do anything uniquely innovative even though they're an exclusive part).

Not really exclusive tech, but more like "we can get them and you can't".

Which makes sense. Let's say you make NAND flash, or hard drives. Would you want to sell to Apple who wants to buy several million of them a month, or 100 different customers who want 10,000 each? You can bet Apple with it's order in the tens of millions of parts will get the best pricing and first delivery over smaller customers.

And competitors are complaining because Apple can soak up so much production that they're paying through the nose for parts. The price of NAND flash goes up during the summer and fall seasons as Apple gears up the holiday season and suppliers are simply too busy fulfilling Apple's order to fill in anyone else's.

Apple buys chips in such huge quantities that it's no wonder vendors give them exclusivity and all that. Apple will buy up entire production lines (original iPod - Apple bought Toshiba's entire production for 3 years), and vendors will open up Apple-exclusive production lines just to fulfill Apple's orders.

Ditto everything else - and hell, if you make something cutting edge, Apple will even pay you to make a new factory or R&D or whatever, in return for some exclusivity (which doesn't matter too much since your production will be 100% going to Apple to fulfill their orders anyhow). Apple's done this with NAND flash manufacturers (wasn't it like $6B?) and LCD (Sharp reportedly got a huge investment for a new LCD factory from Apple).

Suppliers will also take margin cuts if it means a big run of continuous business - a year of guaranteed output for Apple versus having to deal with all the smaller customers who come and go like the wind?

As for competitors, the Blackberry Playbook was delayed simply because the touchscreen manufacturer was busy making iPad/iPad2 touchscreens (by the millions) that it really didn't have time to deal with dinky customers wanting just 100,000 or less per production run.

And hell, Apple's now Samsung's #1 customer, ousting out Sony.

Other customers may buy more of a product (e.g., Dell with Intel processors), but Apple tends to buy a very limited range of product so runs are huge. Dell may make 10 times more PCs than Apple, but I'm sure Apple only orders maybe 20 different CPUs at most from Intel, while Dell orders whatever's cheapest at the time (probably Apple leftovers), so for any one processor model, Apple probably outbuys Dell, even though as an aggregate, Dell buys more.

Hell, on the retail side, we see this as Wal-mart, Sam's Club, Costco and others - buy a huge quantitiy, get a discount. They buy so much suppliers give them all sorts of discounts and concessions.